These Slides From The J.P. Morgan defence Conference Show Contractors Aren't Too Worried About Military Cuts

ATK investor presentation military defence slide 5

Photo: ATK

In August, President Barack Obama and the congress agreed to reduce the U.S. Department of defence budget by $487 billion over a decade. According to the Associated Press, the $614 billion defence budget for 2013 is about $32 billion less than this year’s budget.The pundits, politicians and experts have all chimed regarding the U.S. Department of defence spending, but this week at the J.P. Morgan Aviation, Transportation & defence conference, the numbers are speaking for themselves. As companies make their presentation before investors and advisers, their financials and outlook on the market might give us some insight into the actual defence spending.

Among the companies presenting were: 

  • Alliant Techsystems Inc. (NYSE: ATK) -producer of solid rocket propulsion systems and a leading supplier of military and commercial aircraft structures
  • ITT Exelis (NYSE: XLS) – provider of variety services such as surveillance, monitoring, communication and satellite systems as well as vehicle and equipment maintenance. 
  • Moog Inc. (NYSE: MOG) – designer and supplier of motion control technology and aircraft and missile components.
  • Kaman Corporation(NYSE: KAMN) – a manufacturer of self-lube airframe bearings, aerostructures, helicopter service and support and helicopter systems and components


Companies such as ATK provide U.S. Government with variety of products and services, which often leads to a large part of their portfolio being dependent on the U.S. Government

According to the company's annual report, no single customer, other than the U.S. Government customers listed below, accounted for more than 10 per cent of its fiscal 2011 sales.

Furthermore, ATK noted that it has seen reduction in sales of tank ammunition

As well as lower sales in special mission aircraft, and reduced incentive fees in missile defence

Many of these companies report contracted backlog to be in billions of dollars, similar to ATK's as show below

ITT Exelis is also largely dependent on its contracts with U.S. Government

As is Moog, whose most recent segment sales report shows decreased spending in Space and Security Surveillance sector

Kaman Corporation, on the other hand, saw a $5 million increase in defence related aerospace sales

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